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US President Donald Trump has warned that no country is "outside the scope" of the tax. Tensions between the world's two largest economies have risen since Trump launched an import tax attack targeting Chinese imports in particular. Both China and the US have adopted measures of retaliatory tax hikes, which has affected the world economy.
The 'like-for-like' exchange has seen US tariffs on China rise to 145 per cent, while Beijing has imposed a retaliatory 125 per cent tariff on US imports. The American side on Friday eased the pressure by giving a list of tax exemptions for smartphones, laptops, semiconductors and other electronic products. China is a major source for these products.
Trump administration officials have said that the tax exemption granted for 90 days has been misinterpreted. This will only be temporary as Trump's team is negotiating new tariffs on many items on the list. "Not only China, but all those who treated us the worst in terms of taxes are not far from the risk of tax increases," said US President Trump.
Earlier, China's Ministry of Commerce said Friday's move was "only a small one". China says the Trump administration should "completely scrap" the entire tax strategy. The US on Friday gave 'reciprocal' tax breaks to smartphones, computers and other electronic goods. This has reduced the cost impact on American consumers for popular high-tech products.
The US Customs and Border Protection Office issued a notice on Friday night that imposed an additional tax of 145 percent on various electronic goods, including smartphones and other technological devices, entering the US from China. Semiconductors are also excluded from the 'basic' 10 percent tax on most US trading partners and the added 125 percent tax in China.
The new exemption will benefit American tech companies such as Nvidia and Dell, as well as Apple, which makes iPhones and other premium products in China. "We are looking at semiconductors and the entire electronics supply chain in the upcoming national security tax investigation," Trump said.
US Commerce Secretary Howard Lutnick has said that the semiconductor tax will be implemented 'within a month or two'. However, he said that pharmaceutical products can remain outside the 'reciprocal' tax. Two weeks ago, Trump announced steep import tariffs on dozens of trading partners had done But he has suspended the said import duty for 90 days. But China is excluded from the exemption.
The American administration has said that it is optimistic that an agreement will be reached with China. But US officials have said that Beijing should contact them first. But Trump's trade representative, James Greer, speaking on CBS "Face the Nation" on Sunday, said that there is no immediate plan for talks between US President Trump and his Chinese counterpart Xi Jinping.
